iPhone 5 sales will blow past most analyst forecasts: Canaccord

An Apple employee distributes iPhone 5 shortly after the device went on sale in San Francisco, California, September 21, 2012. Apple fans queued around city blocks worldwide on Friday to get their hands on the new iPhone 5 - but grumbles about inaccurate maps tempered the excitement.

The shine has come off Apple Inc. shares since the tech darling reported iPhone 5 sales of five million units during its premier weekend, less than some on the Street had anticipated.

But Canaccord Genuity analyst T. Michael Walkley, with fresh sales data in hand, is hardly disappointed. His September "channel checks" indicated very strong sales of the iPhone 5 at key U.S. carriers AT&T, Verizon and Sprint. The checks indicated the device sold well in international markets, too.

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And it's not just the latest version of the iPhone that's flying off store shelves, reported Mr. Walkley. There have been robust sales of the legacy iPhone 4 and 4S models, many of which are going for discounted prices. The 99-cent iPhone 4 at AT&T, for instance, is sold out at many stores and consumers are facing up to a week waiting time for shipments of the older model, he said.

"Given these checks, combined with Apple's plans for an aggressive iPhone 5 launch with 240 carriers in 100 countries by year end, we remain confident in our above-consensus December quarter iPhone estimates with sales of 40 million iPhone 5s and 50 million total iPhones," Mr. Walkley said in a research note.

Furthermore, "we expect additional countries to launch the iPhone 5 in early January, including all three carriers in China, ahead of Chinese New Year in February. With our expectation the world's largest carrier, China Mobile, will launch its first iPhone on its network that also supports its TD-SCDMA 3G technology, we anticipate very strong iPhone sales of 47.5 million during the March quarter."

Upside: Mr. Walkley maintained a price target of $797 (U.S.). That's modestly above the median target on the Street of $780, according to Thompson/First Call.

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RBC Dominion Securities has downgraded Microsoft Corp. from an "outperform" rating, noting that the company has already appreciated 15 per cent year-to-date. "At current levels, we feel a sector perform rating most accurately weights the potential opportunities and risks," analyst Robert Breza said. He believes shares already reflect some of the potential sales gains from the soon-to-be-released Windows 8.

Upside: Mr. Breza cut his price target by $1 to $33 (U.S.)

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A recent site visit to Agnico-Eagle Mines Ltd.'s flagship La Ronde mine has Dundee Securities analyst Ron Stewart turning more bullish on the stock. "The La Ronde mine is impressive by any measure. Geologically, it is one of the most well endowed gold-rich volcanogenic massive sulphide deposits anywhere in the world," he commented.

Excellent companies have high-calibre management and world-class assets, while having the capacity to persevere and emerge stronger when inevitable setbacks arrive, Mr. Stewart said. "Agnico-Eagle demonstrates these characteristics and is well on the way to reclaiming its position as an industry leader in the precious metals space."

Upside: Mr. Stewart raised his price target to $70 (Canadian) from $57, and affirmed a "buy, high risk" rating.

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CIBC World Markets analyst Kevin Chiang initiated coverage of CAE Inc. with a "sector outperformer" rating, believing that the market is overestimating the impact slower defence spending will have on the flight simulation company. CAE's products can make for efficient training of military during fiscally tight times, and it may benefit from governments' outsourcing more work. "CAE is poised to benefit from rising aircraft deliveries and increasing demand for pilot training over the next 20 years," he concluded.

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Upside: Mr. Chiang set a price target of $12.50.

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UBS analyst Matt Donohue assigned a "buy" rating to Peyto Exploration & Development, a natural gas-focused producer with an extensive land base in the Alberta Deep basin. "While many of the mid caps struggle to balance both per share growth and sustainable dividends through their respective business models, PEY's low cost base and operating synergies position the company advantageously relative to its peers in terms of delivering to shareholders." he said. Low natural gas prices remain a key low-term risk, however.

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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